He welcomed a breakthrough in negotiations among US politicians over the ''fiscal cliff'', noting that it was ''late, of course''.

''I think Europe stabilising has been very helpful as well.''

Speaking before accounting firm KPMG's yearly Couta Boat Classic at Sorrento, Mr Funke Kupper said the removal of uncertainty over the fate of Spain, Portugal and Greece could help consumer confidence.

''I'm a little bit more optimistic about this year than perhaps I would have been six months ago, but it all hinges on whether Europe is going to be OK, and that's still untested.''

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He said the coming election ''will give us another nine months of noise''.

''In some ways we will probably have six months of very limited initiatives as people get ready for the election.

''There will be policy announcements but the actual impact will be limited, and I think that's not a bad thing.''

But even with the election out of the way, Mr Funke Kupper does not expect a quick rebound in floats and other merger and acquisition activities, which have been in short supply for the past two years.

''I can't see it getting much quieter than it has been - I mean, we really had a very quiet two years and last year was particularly quiet.

''I think, though, it's more about financial year 2014 than financial year 2013. We need another six months of stability and confidence building … [and] another interest rate cut.

''If Europe stabilises and we get through that and the next couple of months, we might start to see a bit more activity.''

He said the saving rate of Australian households was ''very high right now''.

''That's good for the economy, it's good for the banks, it's not so good for the stock exchange,'' he said.

He said signs of a soft landing to China's boom and a deal over the US fiscal cliff were good news.

''I wouldn't look to Europe for too much assistance, but there are some positive signs,'' he said.

''So I think it'll probably be a better second half than a first half - we've got an election to get over and that adds an added layer of caution and uncertainty into our marketplace.

''People will remain pretty cautious and prudent up until midyear. Hopefully, as we get to the second part of the year, we'll see a little more growth and a little more excitement in the way people feel about the economy.''

He said the high dollar was ''not going anywhere'' and manufacturing industry needed to adapt to the new environment.

Westpac chairman Lindsay Maxsted said he was not pessimistic about 2013. ''But I'm not that much more optimistic … because if you think through all the factors that existed in 2012 that made people cautious … they're all still there.''

He said European central banks had done a good job restoring liquidity, but the region still suffered from high unemployment and social problems.